Why banks are slowly winning the turf war against mobile money

The volume of mobile money transactions dipped 30 per cent in 2025 as more Kenyans embraced alternative media away from the traditional agency-facilitated channels to pay for goods and services.

Findings from the latest report by the Central Bank of Kenya (CBK) show the average number of mobile transactions in a month dropped to 217.6 million in 2025 compared to 309.3 million in 2024.

The data further records a drop in the value of monthly transactions to Sh722.5 billion from Sh753.5 billion in 2024.

This is the first drop in the value of monthly transactions in more than a decade, as recorded by the CBK.

For the volume of monthly transactions, while there was a drop between 2018 and 2019 - from 155.77 million to 154.99 million - the latest drop between 2024 and 2025 is of a higher margin.

This is critical considering the technological advancements and growth in mobile subscriptions that the industry has witnessed in the last decade.

CBK's Bank Supervision Report 2025 puts forward different reasons, among them evolving consumer behaviour, cost of transactions, emergence of other digital payment channels, and the realisation by customers that higher volumes of cash transfers attract lower fees on consolidation.

“There was reduced frequency of low-value transactions, while users increasingly consolidated transfers into fewer, higher-value payments,” the report says.

Particularly, the report notes, consumers have embraced the mobile banking channel, which eliminates the need for mobile agency cash transactions.

A drop in these two indices, despite an increase in mobile subscriptions, reflects how digital the cash economy has become, so that more Kenyans do not feel the need to convert their electronic money into hard cash for use.

This has been made possible by banks refurbishing their applications, like what KCB has done, to enable users to pay for goods and services directly to mobile pay bills and till numbers from their respective accounts.

This removes the clunkiness of transferring money from the account to the user’s mobile money, then again paying into the till or paybill. This long detour is what attracts more transactional fees.

The CBK report notes these changes. “The decline in cash-in and cash-out transactions largely reflects shifting usage patterns rather than reduced relevance of mobile money,” the report says.

It points out that at the same time, the growing adoption of alternative digital payment channels, including merchant payments and mobile banking platforms, has reduced reliance on agent-based cash conversion, signalling a gradual transition toward a more digitised payments ecosystem.

“This shift highlights evolving consumer behaviour, with users increasingly leveraging digital channels for both personal and commercial payments,” the report says.

Nevertheless, the report says, mobile financial services in Kenya continued to expand in the period, with subscriptions rising by 10 per cent to 78.4 million in December 2025 from 71.4 million in 2024, representing a penetration rate of 149.5 per cent.

This growth, CBK explains, was driven by increased mobile phone device penetration, with the number of devices rising by 6.2 million from 72.1 million in 2024 to 78.4 million as at December 2025.

Despite this expansion, mobile money activity slowed over the same period.

“The volume of transactions declined by 30 per cent, from 309.3 million in 2024 to 217.6 million in 2025, while the total value of transactions fell more modestly by four per cent, from Sh753.5 billion to Sh722.5 billion,” the report says.

“Transaction volumes reached  their lowest point in February 2025, marking the weakest level since April 2023.”

In contrast, the sector’s agent network continued to grow, expanding by 24 per cent from 381,116 agents in 2024 to 473,536 in 2025.

“This sustained expansion reflects continued investment in access infrastructure and has strengthened financial inclusion, particularly in rural and underserved areas, where mobile money remains central to daily economic activity,” the report says.

But just like mobile money transactions, the number of banking transactions undertaken through bank agents decreased by 20.2 per cent from approximately 142.3 million transactions recorded in 2024 to 113.5 million transactions in December 2025.

“The decrease in total transactions was mainly as a result of decreases in transactions relating to cash deposits, cash withdrawals, account balance enquiries, mini statement requests, and payment of retirement and social benefits,” the report says.

“The decrease was attributed to an increase in competition from other competing transaction channels such as mobile money and internet banking.”

The interesting part of this data set is the fact that while the other indices of agency banking dropped, payment of bills grew by 39 per cent.

This reinforces the changing consumer behaviour where their money purchases the needed goods and services without being converted into hard cash.

The report shows that in 2025, the value of banking transactions undertaken through agents decreased to Sh1.4 trillion, from Sh1.70 trillion in December 2024.

The value of cash deposits transacted through agency banking dropped 14.6 per cent to Sh1.2 trillion, while cash withdrawals also contracted by 12.5 per cent to Sh223.6 billion.

Payment of retirement and social benefits also contracted by 83.2 per cent to Sh1.1 billion, as well as transfer of funds by 16.6 per cent.

Payment of bills expanded by 39.2 per cent to Sh29 billion. “The decrease was attributed to a reduction in the number and value of transactions conducted through agents due to increased investments in digital banking channels,” the report says.

CBK states in the report that the financial services industry is being restructured by ever-changing consumer needs, innovative financial products, technological advancement, and the use of multiple delivery channels.

The regulator notes that to remain competitive in the new landscape, banks have continued to introduce new products, expand the existing ones, and add new delivery channels.

“Banks strive to enhance access to customers as well as differentiate their products and services by use of alternative delivery channels such as electronic-banking, mobile-banking, and recently, cloud-based channels,” the report says.